Indonesia police probe Koba Tin for illegal mining

Police in Indonesia’s Bangka-Belitung province are investigating tin miner PT Koba Tin in connection with sourcing illegal tin ore and operating outside its mining area, the police chief said on Wednesday.

Bangka-Belitung Police Chief Imam Sudjarwo told Reuters police had received reports Koba Tin has sourced tin ore from local miners that worked outside the firm’s mining area.

“It means Koba Tin has violated the mining law by operating outside its concession and violated the criminal law for fencing illegal tin ore,” Sudjarwo said from Bangka.

Sudjarwo said police had seized 500 tonnes of refined tin owned by Koba Tin, but the company was still allowed to run its smelter. Koba Tin is 25 percent-owned by state-owned PT Timah Tbk and the rest by Malaysia Smelting Corp. Bhd .

The police were currently questioning some of Koba Tin’s staff, Sudjarwo said. Asked if top officials would be quizzed, he said: “The investigation will lead in that direction.”

Malaysian Smelting Corp. Bhd denied in a statement to the Kuala Lumpur Stock Exchange its Indonesian unit had sourced illegal tin ore.

“Koba Tin collects tin concentrates from small scale miners operating within its Contract of Work (CoW) mining leases based on annual quantity approved by the authorities,” the statement said, adding the ore was documented to ensure its origin.

Tin ore collected from small miners would account for 45 percent of Koba Tin’s 2007 output estimated at 17,000 tonnes, it said. The firm managed a total mining area of 41,000 hectares and has enough reserves until its mining contract expires at the end of 2013, it added.

It said it had suspended ore collection from local miners during the probe, but smelting operations were running as usual to process tin concentrates from its own dredging and gravel pump operations.

The company was also negotiating the early release of 500 tonnes of refined tin due for shipment which was seized by the police for verification purpose, it said.

“Koba Tin shall cooperate fully with any investigative efforts by the police and/or government authority in Indonesia.”

NO UNREST

The police investigation at Koba had not triggered any unrest among local miners and the situation on the tin-producing islands was calm, Sudjarwo said.

In October, dozens of small smelters ceased business after the police closed three for operating without proper mining permits, triggering violent protests by miners concerned about their livelihoods.

Small-scale smelters emerged on the tin-producing island of Bangka, off Sumatra, after Jakarta banned exports of tin ore in 2002 to stop illegal mining that had caused environmental damage on the island.

Tin on the London Metal Exchange traded at a record high of $12,225 a tonne on Tuesday, but closed at $12,100/12,200, buoyed by uncertainty about the operation of the independent smelters in Indonesia which faced closure in October.

“Timah and Koba Tin are actually the biggest buyers of tin ore produced by local miners. People are wondering why the police only arrested officials from the three smelters,” said a trader, who buys tin ore from Bangka.

“It looks like the police want to be fair. They look into Koba because local smelters believe it has been buying lots of ore, more than 500 tonnes a month. The raid simply makes those smelters happy,” he said.

Timah officials were unavailable for comment, but the firm was assigned to buy tin ore from local miners to appease the miners after the violent protests in October.

Before October, the small smelters produced around 60,000 tonnes of tin a year, roughly the same amount of tin produced by Timah and Koba Tin.

“Production from the smelters is undetected right now. The smelters are dying,” said a smelter official.

Indonesia accounts for one-third of the world’s tin output in a market estimated at some 350,000 tonnes annually.

Source: Reuters